Now the new tax year has begun, there are a few changes to the amounts of tax you will be paying.
Coupled with the Spring Statement announcements from Chancellor Rishi Sunak, you will need to be aware of how these changes affect you. Here, we’ll explain what to expect so that you’re kept in the loop.
Spring statement
One of the biggest announcements in the Spring Statement was the raising of the National Insurance contribution (NICs) threshold to £12,570, bringing it in line with the income tax threshold. From 6 July, the primary threshold for class 1 NICs and lower profits limit for class 4 NICs will both rise to £12,570.
For Scotland, the higher and top rate thresholds of income tax will remain frozen in cash terms at £43,662 and £150,000 respectively. People earning less than £27,850 will pay slightly less income tax over the next year and won’t pay more than they did in 2021-22.
While it was announced that the income tax rate in England would be lowered to 19%, the Scottish Government had already introduced this as of 2018/19.
Fuel duty has already been cut by 5p per litre for both diesel and petrol, which the Government says will represent a saving of £5 billion over the course of the next year.
The Scottish Government will be providing an extra £10million to the fuel insecurity fund over 2022/23 which will help people who struggle to keep up with the rising cost of energy.
While some measures have been announced to help with the continuous rise in the cost of living, some feel as though it hasn’t gone far enough.
Finance Secretary Kate Forbes said:
“The Spring Statement has failed to address the biggest challenges facing households today. With soaring energy bills and a cost of living crisis, the Chancellor has not used his Spring Statement sufficiently to provide lifeline support that could prevent households facing fuel poverty.
“Most powers relating to the energy markets remain reserved and Scottish Ministers have repeatedly called for the UK Government to urgently take further action to support households – including a reduction in VAT on household energy bills and support for those on low incomes.”
Making Tax Digital
The way you pay tax is changing. Since 2019, Making Tax Digital (MTD) has been developing and, as of the start of April, will now be the legal requirement for VAT paying businesses.
Any businesses with a turnover below the £85,000 threshold will be required to file their VAT returns and payments online using compatible software. This will be followed by Making Tax Digital for Income Tax (MTD for ITSA) in 2024.
Self-employed business owners and landlords are already being invited to take part in the MTD for ITSA pilot scheme if they have a turnover of £100,000 or over.
Capital Gains Tax
The capital gains tax (CGT) allowance will remain frozen until 2026 so you can still have £12,300 a year before being taxed. The allowance will not be rising to reflect inflation, so anything gained will likely be charged in the future.
Businesses and landlord will have 60 days to report any gains and pay CGT instead of the original 30 days.
Our team at Thomas Barrie and Co LLP are here to answer any questions you may have regarding your tax.
Get in touch with us if you have any questions.